Ask most people what determines how well their investments do, and the answer tends to land in the same place: performance.
Are my funds the right ones?
Am I in the best-performing part of the market?
Should I have moved my money somewhere else by now?
They are fair questions, but after many years of advising people through rising markets, falling ones and the long, uneventful stretches in between, we have come to a quieter conclusion. Over a full investing lifetime, the returns you actually keep have less to do with picking the best-performing fund than with how you behave when things feel uncertain.
Performance matters, but for many investors, investment discipline, not the chasing of it, can have as much influence on long-term outcomes as the investments themselves.
The Part You Control Least
There’s something reassuring about focusing on performance. It feels active and measurable. You can compare one fund against another, look at last year’s figures and feel as though you are making progress.
The difficulty is that short-term market performance is largely outside your control; markets move for reasons no one can reliably predict. Strong relative performance is also hard to sustain: funds that lead their peers over one period frequently fail to stay there over the next, which makes choosing investments mainly from recent rankings an unreliable approach.
It’s why experienced investors tend to talk about time in the market rather than timing the market, the first is something you can genuinely influence, the second almost no one gets right consistently.
None of this means performance is unimportant. It means it’s not the lever most people think it is. The things you can influence (how your portfolio is built, what it costs, how consistently you invest and how you respond when markets wobble) quietly do more of the heavy lifting.
The Returns You Get Aren’t Always the Returns the Market Gets
Here is a pattern we see often, and it surprises people every time.
An investment can perform perfectly well over a decade, yet the person holding it ends up with noticeably less than that headline figure. Even before you allow for tax or charges, the timing of money moving in and out can pull an investor’s experience away from the fund’s headline return. Money gets moved out after a fall, when confidence is low, and moved back in once things feel calmer and prices have already recovered. The investment did its job. The behaviour around it didn’t.
This gap, between what an investment returns and what its investors actually earn, is well documented, and it’s often linked to the timing of money moving into and out of the market.
Emotional decisions play their part, though regular contributions, withdrawals and everyday circumstances shape the figures too. It’s a very human thing to do. Watching your savings fall in value is uncomfortable, and doing nothing can feel like negligence, but selling after a fall can crystallise a loss and may mean missing the recovery that follows. Recovery is never guaranteed, of course, which is why any decision to sell is better based on whether the plan still suits you, rather than an assumption that every investment will bounce back.
Why This Matters More as You Approach Retirement
Discipline is easier to talk about than to practise, and without proper guidance it becomes harder, not easier, the closer you get to needing your money.
When retirement is decades away, a market fall is an abstract inconvenience. When you’re five years out, or already drawing an income, the same fall feels far more personal. The temptation pulls in two directions at once: to pull everything into cash for safety, or to chase stronger returns to make up for lost ground. Both are understandable. Both can quietly undermine a perfectly sound plan.
There’s also a genuine risk to be aware of at this stage. Drawing an income from investments while their value is falling can wear a portfolio down faster than the same fall would earlier in life. The issue isn’t simply age or the time left on the clock; it’s that money taken out during a downturn is no longer there to share in any recovery that may follow. It’s a real consideration, but one that structure and planning can manage, rather than a reason to abandon a long-term approach altogether.
Investment Discipline Isn’t the Same as Doing Nothing
It would be easy to read all this as an argument for setting everything up once and never looking again. That’s not what we mean.
Discipline only helps when the plan itself still suits you. Staying invested in a portfolio that’s become too concentrated, too expensive or no longer aligned with your circumstances isn’t a virtue. The aim isn’t to resist every change; it’s to make changes for the right reasons, because your goals, income needs, capacity for loss or wider financial position have shifted, rather than because a few unsettling weeks in the markets have knocked your confidence.
A disciplined approach still involves plenty of activity. Portfolios are reviewed, risk is adjusted as your circumstances change and assets are rebalanced so that a good run in one area doesn’t quietly leave you more exposed than you intended. As retirement nears and income needs come into focus, strategy shifts accordingly.
The distinction is between deliberate change and reactive change. Adjusting your plan because your life has changed is sensible. Adjusting it because a headline unsettled you is usually not. The discipline lies in knowing the difference and in having a plan clear enough that you rarely have to guess.
Where Good Advice Actually Earns Its Keep
People often assume the value of an adviser lies in finding the best-performing funds. In our experience, a great deal of it lies somewhere less glamorous: helping you stay invested through the moments when your instincts are telling you to do something you may later regret.
For many clients, that behavioural support (a steady hand, an outside perspective and a plan you understand) proves more valuable over time than trying to make repeated tactical fund calls. When markets turn and the news turns with them, the most useful chat is often about whether anything material has actually changed and, if it hasn’t, why the original plan still holds.
That’s not a dramatic form of value; it rarely makes the headlines. But it is, more often than not, the thing that quietly separates a good long-term outcome from a disappointing one.
The Better Question
So when you’re finding yourself wondering whether your money is in the right place, it’s worth pausing on a slightly different question. Not “which fund performed best last year?”, but “do I have a plan sensible enough, and clear enough, that I can stick with it long enough for it to work?”. A little bit more of a mouthful, but worth it!
Performance will always fluctuate. Investment discipline is the part that is genuinely yours, and for many people it does more to shape the outcome than any single fund decision.
If you would value a calm, friendly, and considered look at whether your plan is built to keep you invested through whatever the years ahead bring, we would be glad to talk it through.
The value of investments can fall as well as rise, and you may get back less than you invested. Past performance is not a reliable indicator of future results. This article is for general information and does not constitute personal financial advice.
